ANY QUOTES USED MUST BE ATTRIBUTED TO MURNAGHAN, SKY NEWS

DERMOT MURNAGHAN:
When George Osborne stands at the dispatch box to deliver his Autumn Statement on Tuesday it will be against the backdrop of flat economic growth here and of course crisis in the eurozone, so all eyes will be on a growth plan and many of this morning’s papers are reporting that the Chancellor will embark on £10 billion worth of credit easing, to get money to small and medium sized businesses while also announcing help to commuters and drivers. Well joining me from Cambridge is the former chancellor, Alistair Darling, a very good morning to you Mr Darling. What room for manoeuvre do you feel the Chancellor has in the Autumn Statement in terms of to what extent do you think he can afford to slow down, as I know you want to see, the deficit reduction programme?

ALISTAIR DARLING:
Well I think what you’ll see on Tuesday is more the makings of a mini-budget than I think George Osborne would have liked which is simply a progress report and the reason for that is that growth is quite clearly coming in a lot lower even than he forecast even in March and remember, the independent Office of Budget Responsibility has now had to down rate its forecasts on three occasions since the last general election. I think obviously I wouldn’t have started from where he is at the moment but I think it is necessary for him to do something more to help businesses. I would like to see him do something to ease the burden on those people on modest and low incomes through the tax system and obviously there will be things on infrastructure, although a word of caution there – they take a long, long time between conception and actually putting shovels in the ground. I think what is clear is that unless the government has got some credible plan for growth, then the lack of confidence which is holding back businesses and therefore the growth in our economy, that’s going to continue and if that’s the case, borrowing will increase and not decrease.

DERMOT MURNAGHAN:
But in this febrile international atmosphere, something of course you know all about from your experiences in 2008 and 9, if the Chancellor in effect stood up and said I am going to attempt to borrow more money to spark growth, do you not think the response from the international markets would be pretty severe?

ALISTAIR DARLING:
Well look, I think there’s two things here. Countries have got to do what’s necessary within their own territory if you like in order to get the economy moving and remember, it has now been conceded that Plan A is slowly but surely being left behind and whatever you want to call the new plan, it is different to the one he set out in June 2010 so that particular Rubicon has been crossed. I think the second point, you have a point there, that if countries go it alone and they stand out from the pack there is a risk there, that’s why the second leg of George Osborne’s approach has got to be to try and resurrect some international pressure to get economies growing, not just in our country but in Europe and in the Western world. That’s why the G20 meeting in France three or four weeks ago was such a wasted opportunity, why when the European finance ministers meet again on Tuesday evening they need to discuss how they are going to sort out the problems in Europe which are not the cause of our problems because our economy stopped growing before the eurozone crisis, but there is no doubt to my mind that unless you repeat the impetus and the drive that we had in the G20 in 2009, with countries acting together and doing things in a similar way, bringing down the deficits yes, but also getting growth going, then I fear this problem is just going to get worse and worse. I actually think the situation now is far worse than it was in the banking crisis of 2008 because you are now talking about doubts over the creditworthiness of very large countries in Europe as well as countries like Greece and so on, so it is important that we advance on both the domestic front but crucially that we step up our efforts in Europe and the wider world as well.

DERMOT MURNAGHAN:
It’s interesting you say that, Mr Darling, because there are people on the Labour front bench now who don’t accept the eurozone as an excuse, so to speak, the eurozone crisis but there you’ve said it, the situation is very, very different now from two, two and a bit years ago, because of what’s going on in the eurozone and the threat of sovereign default.

ALISTAIR DARLING:
I am certainly not saying that the eurozone is the cause of the problems we’ve got at the moment. They are making it much more difficult and remember, I have said it on many occasions before and this is a view that my colleagues on the front bench share, our economy stopped growing at the end of 2010, long before the euro crisis manifested itself, so that problem is a direct result of the policies that this government produced which shattered confidence and it is not surprising that businesses are not rushing to take on people or open up new lines of investment and so on. What I do say though is you have got to deal with the problems here at home and remember, the problems here at home mean that George Osborne is already having to borrow £46 billion more than he said he was going to have to, you have to have that hand in hand with actions in Europe because there is no doubt that if we see a disorderly break-up of the eurozone, which I’m afraid now is a distinct possibility, where we have seen large countries like France having their creditworthiness called in question or even last week having Germany unable to get away its debt auction, that should send alarm bells down every corridor in every European government and yet what’s happening? They’re standing back waiting for something to turn up. Now that is inexcusable but you have got to do the two things at the same time I think, you have got to take action here at home to make sure that we get our house in order, to make sure you have got borrowing coming down but you have got confidence going, but we have got to redouble our efforts and this can be done, for heaven’s sake it was done only two years ago, but it’s got to be done again and the urgency is far greater than it was then.

DERMOT MURNAGHAN:
I wanted to ask you about things that were done a few years ago. You tried something similar yourself, this idea of credit easing. Of course the flow of capital, particularly to small businesses, the private sector, is essential yet it still seems to be something of a blockage there. Is credit easing a good idea?

ALISTAIR DARLING:
Well if it works, yes. Look, there are two things, you remember the Bank of England announced an extension of the quantitative easing scheme and my criticism then was I wasn’t sure that money was going to find itself onto the high street and that remains a problem, that is something that the Governor of the Bank of England needs to attend to but as far as credit easing is concerned with the government underwriting loans, yes, in principle it is a very good idea. The question that I think businesses will have is how can we actually ensure that manifests itself in terms of loans being made available on the highs street to the businesses that need them and I think the government will have to come up with some answers on that. But yes, the scheme in principle is good. We did something similar three years ago so it is right in principle but actually in practice, making it work, making the money actually get out into the high street into the pockets of small businesses is fine but of course, I come back to my first point, no business is going to be taking on new people or opening new lines of investment unless they have got the confidence to do so, so on its own it wouldn’t be enough but yes, it is a welcome step.

DERMOT MURNAGHAN:
Can I just finally ask you, Mr Darling, given the parlous economic circumstances we have been discussing here this morning, do you think the public sector strike on Wednesday is just going to make things worse? I suppose it is an unquantifiable cost to the economy but certainly pretty large.

ALISTAIR DARLING:
Well of course it will have an impact but the depressing thing is this, there has never been an industrial dispute that hasn’t been settled. Whatever happens, there will be a settlement in this dispute and the question, and I was just listening to Brendan Barber who I thought was making some sensible points, why not sit down and try and negotiate and enter this dispute before Wednesday, before all the disruption that’s going to be caused? All these disputes are always solved by negotiation, there’s no other way to do it so why not get on with it now?

DERMOT MURNAGHAN:
Okay Mr Darling, thank you very much indeed for your time, Alistair Darling there, former Chancellor.

ALISTAIR DARLING:
Thank you.